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They make it sound so simple. You have a sudden water leak in your house. You call a plumber who makes an emergency repair. He tells you there is water damage because it was a sneaky leak that went undetected for long enough to mess with pipes or cabinets or kitchen tile – or the balance of the cosmos. “Let me call my buddy,” he says. “He handles the dry-out process so you won’t have more troubles. Sign this form that transfers your insurance claim, we’ll get you a lawyer to work with your insurance company. Don’t have to worry about a thing.” This is the point at which you should commence to worry.
Signing over your insurance claim means you’ve agreed to step away and let a stranger handle things. And, you may have NO idea what goes on behind the scenes. Here’s a peek: The plumber got a nice referral fee for inviting the water dry-out company to your house, and that guy got money for looping the building contractor in, who also brought in a friend to handle the carpentry, and the attorney figures out a way to file a lawsuit …. Get the picture? You’ve heard the phrase, “Too many cooks spoil the soup.” What do you think too many non-essential people do to the cost of an insurance claim? And, when hundreds of people are roped into this type of scenario, what do you think happens to the cost of homeowners insurance? Yes, easy questions.
The cost of insurance is the cost of claims. Claims go up, insurance goes up. The Consumer Protection Coalition has a number of resources to explain this phenomena called Assignment of Benefits (AOB). Florida insurers have been trying to rein in the practice for a couple of years. There are a couple of bills circulating in the Legislature. Interestingly – or maybe predictably – other states don’t seem to have this as an issue. That tells you something.
Look at the water claims data from Citizens Property Insurance. Their analysis shows that the frequency of water damage claims is up by 45 percent from 2010 to 2014. And, the average cost of each claim rose by 43 percent over that time frame. No, water leaking from pipes has not become over 40 percent more forceful in that four-year time-frame.
Plugging that leak is what the AOB issue is about.
A plastic foam superhero action figure saved me yesterday. She flew into my mailbox, along with a pamphlet extorting, “Be a Cyber Hero.” And, I am (cue Superman theme song).
I got an email yesterday purportedly from a newspaper reporter. In the subject line, it said “View Document,” and there was a graphic of the document to click upon. The email even had the reporter’s correct email address, signature line and phone number. I did not click it – because it’s Cyber Security Awareness Month – and a foam action figure warned of danger ahead.
Guess which state had the highest number of identity theft complaints last year. Yeah, it’s Florida. Our state ranks highest, based on complaints per population. And, Florida is behind only California for cyber crime.
There always seems to be someone trying to get rich quick at the expense of the unsuspecting. Insurance fraud is a $32 billion business for property/casualty insurers, and the U.S. Dept. of Health and Human Services estimates healthcare fraud to be more than twice that amount. While there are many fraud victim stories to tell, it’s kind of scary when one hits close to home.
Scenario: A friend of a friend says he has a way for you to make a couple of hundred bucks, plus get new kitchen cabinets, upgrade your plumbing and get a new tile floor at the same time. Something like that must have been said to the dozen Miami homeowners who took the bait and wished they hadn’t after they got arrested for insurance fraud last week.